China is changing how it handles major energy and infrastructure projects, opening the door to more private investment in energy projects. In some cases, private investors could hold more than a 10% stake. The government says this move is meant to boost investment and give the economy a lift.
According to the cabinet, projects eligible for minority private shareholding will require state approval and could include nuclear power, hydropower, inter-provincial and inter-regional transmission lines, oil and gas pipelines, LNG import and storage facilities, and water supply initiatives. Authorities will carry out feasibility studies to evaluate revenue potential and expected returns on investment before allowing private participation.
China has emphasized that private investment in energy projects is both encouraged and supported. The proportion of private stakes in a given project will depend on the project’s status, the interest of private enterprises, and applicable policy requirements. For qualifying projects, the government noted that private capital could exceed a 10% share, marking the first formal acknowledgment of raising the private capital ceiling above that threshold.
Xu Xin, deputy head of the legal affairs department at the National Energy Administration, said at a media briefing, as reported by Reuters, “We will further strengthen policy support for attracting private capital into the energy sector,” Similarly, Guan Peng, an official with the National Development and Reform Commission, told Bloomberg on Tuesday, “The policy puts forward clear requirements on encouraging and supporting the participation of private capital in key areas and projects.” adding, “It sends a signal of promoting the development of private investment,”
Earlier this year, amid the peak of the U.S.-China trade war in spring, China introduced its first fundamental law focused on promoting the private economy. The Ministry of Justice described the legislation in May as “a significant step in revitalizing a sector that is key to growth and greatly boosting entrepreneurs’ confidence and expectations,”